Under 20 life plan, paid assuming Medicare

[Guest PGBenefits]

Can someone help a newbie? My firm has a new group health plan. It is an ERISSA filed Trust and I am in Washington state if that matters.

Our certificate booklet says that for firms of less then 20 employees (like ours) the plan is going to pay claims for those employees over age 65 with Medicare primary. It assumes that employees over age 65 have Medicare A & B.

I have an employee who never signed up for Medicare B. He is still an active employee. I don't think our old plan had this provision. Can the carrier do this? My employee had a claim where the carrier paid secondary but since employee doesn't have Medicare B carrier is saying he is responsible for all the costs med B would have paid.

Is the carrier right? I don't know where to start researching can someone give me some direction?

[Guest taylorjeff]

In general, they are right.

The working aged provisions of COBRA/TEFRA apply to employers of 20 or more employees. CMS requires the health plan be primary for medicare eligible employees/dependents. The provisions don't apply to employers with less than 20 lives. I'd say most employers like this arrangement since they're usually charged a lower rate for the medicare secondary or "carve-out" coverage.

This all should have been covered when you enrolled in the new plan. There is usually a space on the employee application where they're asked about both Medicare A & B enrollment. And, normally, as above, there is a significantly lower rate for medicare eligible employees.

I'm not sure what recourse you have. First, are they charging you a lower rate for the reduced coverage?. If not, I'd find out why. You may have an argument to make if there is no rate difference.

Because it is a "trust", complicates matters. You could still complain to the your state Dept. of Insurance. Depending on how the plan is being marketed/administered, they may be able to bring some pressure to bear.

Check with the local social security office. They can tell you when this employee can sign up for Part B. They've probably experienced this with other employers and may have some guidence.

Can someone help a newbie? My firm has a new group health plan. It is an ERISSA filed Trust and I am in Washington state if that matters.

Our certificate booklet says that for firms of less then 20 employees (like ours) the plan is going to pay claims for those employees over age 65 with Medicare primary. It assumes that employees over age 65 have Medicare A & B.

I have an employee who never signed up for Medicare B. He is still an active employee. I don't think our old plan had this provision. Can the carrier do this? My employee had a claim where the carrier paid secondary but since employee doesn't have Medicare B carrier is saying he is responsible for all the costs med B would have paid.

Is the carrier right? I don't know where to start researching can someone give me some direction?

[Kirk Maldonado]

PGBenefitsL

You better check out the facts more before you go to the insurance commissioner. As a general rule, the only reason you have a trust is if the plan is self-funded. No plan with less than 20 employees should be self-funded. That means that you might be part of a MEWA. Some states consider MEWAs to be unlicensed insurance companies and will shut them down. A number of MEWAs have turned out to be Ponzi schemes. My recommendation is that you need to hire competent ERISA counsel.

[leevena]

Yes, the carrier can do this. The law was changed some 20 years ago or so (1984 I think) when the feds were looking for ways to decrease their costs. The carrier is not "electing" to do this, rather, the govt has required it to be done this way.

As for you to research, you could go to the federal regs and find it, but as I said earlier, this has been the way for years. As with other changes that occur, I usually keep the materials for a year or so and then toss or forget once we get accustom to it.

I also agree with what Kirk said. You may want to do some research into this and find out if it is a self-funded plan on it's own, or if you are part of some mewa. Either way, I believe you will still be in the same situation.

Your employee can still enroll in part b, and you should encourage him/her to do so.

[Kirk Maldonado]

leevena:

If the employer "encourages" people to elect Medicare in lieu of participating in the plan, the employer could possibly get hit with an ERISA section 510 claim, an age discrimination claim, or an audit by a governmental entity.

I think that the employer better retain knowledgeable counsel to advise it before it starts doing something like that. Absent obtaining sound legal advice, I think that the employer should remain silent on this topic.

[leevena]

I am not suggesting that the employer encourage enrollment in B instead of the plan. I am suggesting that the employee/medicare eligible person enroll in part B now. Sorry if I confused anyone.